The CAC 40 index is set to open higher today, joining a global rally in stocks as investors price-in more stimulus in the United States. The index closed 0.55% higher yesterday. Other European indices like the FTSE 100 and DAX index are also set to soar. Similarly, in the United States, the Dow Jones and S&P 500 index futures are in the green.
The background: The CAC 40 is made up of the biggest French companies like Louis Vuitton, Air Liquide, and Renault, among others. In the past few months, the index has been on an upward trend since traders have been pricing-in a recovery of the global economy. It has jumped by 56% from its lowest level last year.
What’s happening: The CAC 40 and other global indices are in high spirits even as the number of coronavirus cases continues rising. This is partly because countries have started issuing vaccinations, which will ultimately slow the spread.
Also, investors hope that the new US Congress will implement more stimulus to support the economy. That will be a good thing for the CAC 40 constituents because most of them make a substantial amount of money from the United States.
CAC 40 technical outlook
Turning to the daily chart, we see that the CAC 40 index moved above the vital resistance level at 5,135 in November last year. Today, it is trading at 5,670, which is the highest level since February last year.
It has moved above the 50-day and 25-day exponential moving averages and the 78.6% Fibonacci retracement. Therefore, the index will possibly continue rising as bulls target the next resistance at 6,000 euros.
CAC technical chart